Kentucky bourbon reform: Bill would make large-scale vintage spirits sales illegal

Kentucky lawmakers are moving to close loopholes in the state’s Vintage Distilled Spirits law, which has created a thriving but legally questionable market in highly sought-after bourbons including Weller and Blanton’s.

Legislation filed Jan. 31 passed a committee on Feb. 21 and is heading to the House floor that would, among other things, make it illegal and punishable with jail time for someone to buy or sell more than 24 “packages” or bottles from a single person in a year.

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In 2023, the Herald-Leader analyzed Vintage Distilled Spirits sales reported to the Kentucky Department of Alcohol Beverage Control and found some individuals sold hundreds of bottles to retailers over the five years since the Vintage Distilled Spirits Act was passed.

One man sold five cases of Weller Special Reserve, a case of Weller Antique 107 and half a case of Weller Full Proof in May 2021 to one store in one visit. Then came back in June with four more cases of Weller Special Reserve.

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Another sold at least 22 times in 18 months, bringing Blanton’s, Weller, E.H. Taylor, Eagle Rare, Old Rip Van Winkle, Pappy Van Winkle and similar brands to the same Lexington store. In a six-month stretch, he sold almost 600 bottles, including 40 bottles of Blanton’s in one March 2022 trip.

Blanton’s, Weller, Pappy Van Winkle and other premium Kentucky bourbons are popular purchases with bourbon tourists, thousands of whom come to the state every year to visit distilleries and take home drinkable souvenirs. Many of those bottles come from “flippers” who scoop them up at Buffalo Trace Distillery in Frankfort or buy them out of state.

Stores like Bourbon Creek in Fayette Mall in Lexington do a brisk business in such bottles. Co-owner Mark Thomas told the Herald-Leader last year that the stores provide a service for a convenience fee.

“If you do it responsibly, then yes it can be a great opportunity for business and customers,” Thomas said. “But you have to take it upon yourself to comply. A lot of stores get lazy or don’t do it properly, and ABC investigators have a lot bigger fish to fry.”

What the Kentucky Vintage Distilled Spirits bill would do to bourbon sales

House Bill 439, filed by Rep. Matt Koch, R-Paris, would make it a Class A misdemeanor crime for a first offense punishable by up to a year in jail, and a Class D felony crime, punishable by up to five years in jail for each subsequent offense, to sell more than 24 bottles in a year or to buy more than 24 bottles in a year from the same seller.

Koch said at a Feb. 7 hearing on the bill that the original Vintage Distilled Spirits legislation passed in 2018 “created an unregulated fourth tier in the alcohol industry. ... People were selling thousands of bottles and turning this into this whole industry.”

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The bill also would require retailers and bars that want to buy vintage distilled spirits to get a special license annually with a fee of $300. The purchasers would be required to submit monthly reports to the ABC with details on who they bought from and exactly what they bought.

These reports would be used to track the number of purchases from individuals and make it easier for ABC to enforce the limits, which are in existing regulations, Koch said.

Can the Kentucky ABC auction off seized bourbon?

The bill also would allow the ABC to dispose of bottles it seizes through a public auction, with the money going into an Alcohol Wellness and Responsibility Education fund for grants to Kentucky high schools, colleges and universities to promote alcohol responsibility.

Under an amendment passed on Feb. 21, the bottles would not be able to be auctioned until the appeals process had been exhausted and the case finalized.

Justins’ House of Bourbon connection to proposed new legislation

The committee also added language that would require Kentucky ABC to provide a notice of violation to a business within 14 days if bottles are seized.

This issue has come up in the Justins’ House of Bourbon case; the vintage retailer sued the ABC in Franklin Circuit Court after the state agency took more than six months to file a notice of violations after seizing more than 600 bottles from two stores. The ABC case and the lawsuit are still pending.

Koch said Wednesday that businesses “deserve to know in a timely manner.”